Renovations and home insurance: check your coverage options

Civil liability insurance

If you’ll be doing the work yourself with family or friends, you’ll need sufficient civil liability insurance: if an accident happens and someone is injured, you could be held responsible.

For example, let’s say your brother-in-law is helping you reshingle your roof, and is permanently disabled after a fall. He could sue you for damages. At that point, your civil liability insurance will come into play. Your home insurance policy probably includes this protection, but it’s a good idea to confirm that the coverage amount is sufficient before breaking out the toolbox.

If you entrust the work to a contractor, make sure they have their own professional liability insurance. That way, you’ll be better protected if any damage is caused to your house or a neighbour’s, or if a worker is hurt in an accident on the job.

Vacant house during work

Say the work on your bathroom is so disrupting that you decide to move the whole family to a friend’s house for a few days. Leaving your house unoccupied could have an impact on your insurance contract, depending (among other things) on the type of renovations, how long the work takes, and the number of days you’ll be away.

Take a few minutes to talk to your insurer and verify your coverage limits. When you do major renovations, such as ripping out a home’s entire interior and keeping just its original shell, most contracts include four general exclusions: water damage, theft, vandalism and broken windows. If one of these problems occurs during your absence, it’s possible that you won’t be compensated (you will always be covered in case of fire, however). These exclusions do not apply to minor renovations, for example replacing the roof, adding a garage or finishing the basement.

Increase in the value of your home

If you’ve renovated your kitchen, installed an in-ground pool, or converted the basement into the family room of your dreams, it is very much in your interest to inform your insurer. That way, you’ll be sure that your home and possessions are properly covered.

Some types of work will in fact increase the reconstruction value of your house; for example, if you add a room or renovate the basement. Others can increase the claims risk, like installing a spa or pool, both of which also require the addition of a specific rider, or endorsement, to your insurance policy in order to be covered. Your premium must be recalculated to take those changes into account, so it could increase after the work is completed.

Not all renovations will bump up the cost of your premium, though! It might even decrease, if the work results in a lowered claims risk. For instance, you’ll reduce the risk of loss due to fire, water and theft if you get rid of your wood-burning stove, change your roof covering, and installing an alarm system connected to a central alarm station.

Most important types of work to be mentioned

• Adding a room or garage
• Renovating the basement for liveability
• Installing a spa or pool
• Converting the heating system (e.g., from oil to electric)
• Redoing the roof covering
• Changing the water heater
• Replacing an old fuse box with a panel equipped with breakers
• Installing an alarm system

Forgetting to inform your insurer of changes made to your house or keeping quiet about them to avoid an increase in your premium could cost you a lot of money. Your insurer’s goal is to offer you coverage that corresponds to the value of your rebuilt residence. In other words, if they don’t know what your home is worth after the renovations, and you file a claim, your compensation will be based solely on the value before the work.

Moreover, if you install a swimming pool or fireplace without mentioning it to your insurer, and there’s an incident, your payout may be lower, or you may not be compensated at all. It’s therefore very much in your interest to lay all your cards on the table when talking your insurer.